Friday, January 26, 2007

Lots of talk about energy lately; it reminds me of being in high school in the mid 70s.

The President's SOTU address stirred up commentary from Daniel Yergin in the Wall Street Journal (subscription required) and now Charles Krauthammer in the Washington Post (via Cone). Krauthammer proposes that we forget about ethanol and (1) tax gas, (2) drill in the Arctic, and (3) go nuclear.

Politically, he can kiss (2) goodbye under a Democratic congress, but I'm all for gas taxes and nukes. And although Krauthammer doesn't say it explicitly (he probably doesn't want to raise the ghost of Jimmy Carter's sweater), gas taxes are all about conservation.

We talk about conservation at home, in various ways, ranging from "why don't you kids ever turn out the lights" to daydreaming about our next car (more about that in a bit), to ranting about how much we hate sending money to fat Saudi princes by buying gasoline.

But I learned from Yergin's article that our #1 source of oil imports is Canada. #2 is Mexico, and #3 is Venezuela. The Saudis are pretty far down the list.

Still, lowering overall demand for oil will at least put a dent in the Saudis' disposable income for bankrolling worldwide radical Islamism. Reduced American consumption should please our Canadian neighbors who like to complain about our profligate ways (they'll be happy to make do with fewer of our petrodollars, yes?), and there's never anything wrong with reducing Hugo Chavez's oil income. (Sorry, Mexico.)

Krauthammer & Yergin point out that we've been hearing about "energy independence" since Nixon and Carter, and nothing much has happened to bring it about.

But one big thing has changed since then: automotive technology.

In 1975, I was driving a "small" car -- a Chevy Nova with a 327 straight 6 that probably got 15 mpg (and yes, I wrecked it, if you must ask).

Today, I can buy a Toyota Prius, a not terribly expensive car, which outperforms the old Nova in almost every way, and which averages just under 50 mpg city and highway.

A lot of other cars get comparable very high mileage, and almost all cars today get better mileage than cars did in the 70s. Which is to say that car consumers now have options that can soften the blow of higher gas prices.

If you get them in stick shifts, Civics or Mazda3's are fun to drive and very efficient. I used to get 40mpg in almost all highway driving in a 95 model. There are a lot of good choices out there. My new car isn't as efficient as the civic, but a good amount bigger and I'm still getting 30-35mpg.

Well, remember, it doesn't matter who we buy our oil directly from. The US buys oil on an international market where everyone pays the same price. So if we buy a lot, it drives the price up for everyone.

Meaning there's little difference between buying oil from Canada and buying oil from Saudi Arabia in the first place --- Saudi princes reap the benefits of our oil consumption indirectly.

And since you're interested in gas taxes, that makes me wonder: Do you read Greg Mankiw?

Yeah, Greg Mankiw is great. I read him every day. And it occurred to me that you might like him, too. He's not extremely libertarian like Marginal Revolution; he's more a Wall Street Journal type of economist.